The tax office revealed its plans to a committee scrutinising the bureaucracy's spend on building works after speculation its Moonee Ponds office was the next in line to adopt a new "flexible" layout.

More than 1200 tax officials in its tired inner-north-west Melbourne digs would have their floor-space slashed by one-third to 14,000 square metres under the project to move them into a smaller space.

The tax office says it is yet to decide on desk numbers but early plans allow for 1200 work points, down from 1430 in the Moonee Ponds office. It has 1250 staff in the building but 150 are casual workers on different shifts.

A union for ATO staff said hot-desking was harming productivity at the agency's Gosford office, and the new plans would leave more public servants working on tiny desks.

Australian Services Union official Jeff Lapidos said the Tax Office had told the union there was no decision yet on hot-desking at the Moonee Ponds building.

"We like to believe the tax office will behave with integrity and be open and transparent when it consults with us about changes it wants to make with our work or our workplace," he said.

"Unfortunately, the tax office is not meeting our expectations when it comes to its proposals for new leasing arrangements for its Moonee Ponds office."

The office confirmed it was considering adopting hot-desking at the building but said the design had not been finalised.

It told parliament it would fit out four floors at its building on Gladstone Street in works expected to finish in mid-2020, coinciding with the end of its lease. The tax office would sign a new lease with 7200sqm less room.

It wants to cut its wasted floor space and update its tired-looking offices in a move that could bring hot-desking - requiring workers to find a desk and pack up their belongings each day - to a third ATO building after it was rolled out in Gosford on the NSW central coast, and Docklands in Melbourne.

"There will be savings from the reduction in leased space as well as decreased operating costs," a tax office spokesman said. The agency won't know the exact amount until costs are approved by the parliamentary committee.

A victory at the industrial umpire in December cleared the way for the tax office to roll out hot-desking, a project opposed by Mr Lapidos and a potential sticking point in the next round of workplace bargaining.

"There are significant delays at the beginning and end of each day to set up your desk – this waste of time and effort ought to be counted against the savings in rental costs from using less floor space," he said.

"We have not seen this addressed anywhere."